Picking up from what has been left of a 1960s attempt to build an aluminium empire, Ghana Integrated Aluminium Development Corporation (GIADEC) is seeking to attract $6bn worth of investments to create a value chain dominating Africa, a project some analysts say is too optimistic.

“It’s quite an ambitious plan if you look at it in terms of where the industry is in Africa today,” GIADEC CEO Michael Ansah tells The Africa Report, referring to Ghana’s project that was first announced in September 2021.

“This plan has the capacity of delivering high-earning jobs to individuals of course and the employment has the capacity to hugely impact economic growth as a result of the significant multiplier impact on the entire economy. The future is exciting for us.”

Analysts estimate the aluminium industry’s contribution to Ghana’s GDP to jump to 4% should it be fully developed. Its current contribution is quite negligible, standing at below 0.05%.

In Africa, Cameroon, Egypt, South Africa and Guinea — the biggest producer — have made strides in their aluminium production processes over the past years, but are yet to achieve full vertical integration.

This country is rich in minerals, but we’ve been exporting minerals in their raw state.

Ghana aims to fill this void by establishing itself as an aluminium powerhouse: from bauxite mining to alumina refining, smelting aluminium and fostering downstream industries.

GIADEC is targeting the aerospace, automobile, construction, pharmaceuticals and cable manufacturing industries where demand for aluminium is growing.

It was Ghana’s founding president Kwame Nkrumah who first mooted the idea back in the 1960s, yet not much has been achieved ever since.

“This country is rich in minerals, but we’ve been exporting minerals in their raw state. We want to change that narrative and add value. We want to become an exporter of manufactured goods of value,” says Ansah.

While bauxite mined in Ghana is exported, the West African nation’s smelter Volta Aluminum Company, which now operates below 40% of its capacity, imports alumina to feed its plants.

Ghana’s bauxite mining output is also stuck at about 1.4m tons per annum out of a potential 5m tons.

On lookout for investors

The targeted $6bn investments are meant to achieve the grand aluminium ambitions. Wooing investors has become an integral part of Ansah’s job as GIADEC boss, as the government will not directly invest in the project.

Last February, Ansah held talks with potential investors on the sidelines of Investing in African Mining Indaba, a major annual conference for the mining industry, in South Africa.

From the US to Spain, Ansah has been making presentations on the big aluminium dream, hoping that his office’s master plan and Ghana’s business climate will attract investors.

“This is a capital-intensive venture,” he says. “All of this will come from the private sector. GIADEC will own equity in each of these projects that we develop, [holding] a minimum 30% stake.”

Bright Simons, an analyst at IMANI, a think tank based in Accra, rules out the possibility of securing financing for the project amid Ghana’s deal with the IMF, which approved a three-year $3bn facility for the gold-rich country last May. This leaves no option but to lure the private sector with reforms.

“GIADEC can’t rely on state guarantees to borrow in the course of the IMF program. It has to re-architect the value chain to establish a viable business model that can attract private capital,” he tells The Africa Report.

Upstream development

GIADEC’s current portfolio of assets includes:

• mining rights to all of Ghana’s estimated 900m tonnes of bauxite reserves at Kyebi, Awaso and Nyinahin
• 100% shares in VALCO, and
• a 20% stake and interest in Ghana Bauxite Company Limited, a producing mine that has been operating for over seven decades.

2021 came with Rocksure International welcomed as partner to develop the $1.2bn Nyinahin mine and build a refinery.

OPCL acquired 80% stake in Ghana Bauxite Company the following year, shares previously held by Chinese giant Bosai Minerals Group Limited.

GIADEC is seeking investors to increase the VALCO smelter’s production capacity from 50,000 to 300,000 tonnes of aluminium. At least $600m is needed for the project.

“The key policy strategy appears to be an attempt to get VRA to sell cheap hydro power to VALCO … which should allow VALCO to bring more pot lines on stream,” Simons says. “Then, having thus bolstered the downstream offtaker capacity for alumina, then to get bauxite miners to set up the alumina plant.” 

A listed European mining company will be unveiled as a partner for the development of the Kyebi mine and refinery this month, Ansah says. “For the VALCO smelter by the end of Q1 next year, we should be announcing a partner for that.”

“There are allied industries that we’re building, such as caustic soda plants and others that will supply inputs to the alumina plants. The size of the project means that several opportunities exist so we’re always open to those investment discussions.”

Lack of infrastructure

The inexistence of infrastructure, such as working rail lines and efficient power supply, is a stumbling block for GIADEC.

Once again, GIADEC hopes the private sector would inject investments in the country’s infrastructure sector, which would pave the way for its aluminium potential.

“We need railways, ports and harbours, power, gas lines and things like that,” says Ansah.

“The biggest risk we have today is the railway, which is no secret because we’re dealing with a bulk item that requires efficient transportation. We’ve only developed about 100 kilometres of rail lines but we need another 150 kilometres to get to the mining areas.”

Through a 2018 arrangement between Sinohydro and Ghana, the Chinese state-owned company was to build a $2bn worth of infrastructure in exchange for a 5% stake of the country’s bauxite reserves. But the deal fell through, which doesn’t bode well for similar future agreements, Simons says.

“The problem is that infrastructural commitments in the form of railways to cart off expanded bauxite production volumes and to convey bauxite to the proposed alumina refinery have all not come through because of the failure of the Sinohydro deal,” he says.

“Meanwhile, the government has abandoned any serious pretence of powering the vision through and has started using key components of the value chain as part of the political gravy train”, says Simon, who points to the lack of industrial track record of the new CEO.

“Raising the billions needed to implement the GIADEC vision before the end of the administration is now something of a pipedream,” he concludes.

Ansah has a brighter vision. “This plan has the capacity to deliver high-earning jobs to individuals, and hugely impact economic growth as a result of the significant multiplier impact on the entire economy.”  

“The future exciting for us,” he says.